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Farmers need ports
In the Far East, the problem of transportation, storage and transshipment of agricultural products was identified
The theme of transport and logistics has traditionally received much attention at the Eastern Economic Forum. This time, it was also not without signing framework agreements on the development of coal ports, providing container transit in the East-West direction, and introducing digital solutions in the transportation process. However, against the background of general optimism, a serious problem of transportation, storage and transshipment of agricultural products was identified. As WEF industry participants noted, without developed logistics, it will be impossible to build effective distribution channels for Far Eastern agricultural products on the Asia-Pacific markets.
The volume of production produced in 2018 by agricultural enterprises in the Far Eastern Federal District is estimated at 234 billion rubles or more than 3,4 billion dollars, which is 5% of the total Russian total. According to the plan of the Russian government, the region’s agrarians should make a major breakthrough in the development of the industry in the next four years, largely due to exports, which are facilitated by the situation on the Asia-Pacific markets. By 2024, the share of farmers in the Far Eastern Federal District, including fishing enterprises, in the structure of Russian exports is planned to be increased to 13%. The Far East should increase production by 60%, to almost six billion dollars, said Deputy Minister of Agriculture of the Russian Federation Sergey Levin.
The leading position is still given to seafood, which today accounts for 87% of the volume exported from the Far East. Export deliveries of marine bioresources will increase from the current 3,3 billion dollars to five billion dollars annually.
Another promising source of revenue is the export of soy and processed products. Today, its volume of shipments abroad is small, however, export deliveries of soy products last year doubled.
“We expect that by 2024, soybean exports will be at least 600 million dollars. We are planning a significant development of this area, ”announced Sergey Levin.
The main consumer of Far Eastern soybeans is China. According to the deputy head of the Ministry of Agriculture, a joint plan has been developed with the Chinese side, through the implementation of which the supply of soy products in China by 2025 should reach 3,7 million tons. Moreover, this figure is not final. According to COFCO President Yu Xuibo, Far Eastern farmland allows growing at least 30 million tons of corn and soybeans with subsequent export to China.
“The growth of the consumption market in China can guarantee and ensure long-term stable demand for agricultural and food products from Russia,” says Yu Xuibo. “At the same time, interaction with the Far East plays a huge role, as the Far Eastern soybeans are wonderful, environmentally friendly.”
Logistics rested on ports
Meanwhile, undeveloped logistics is a serious barrier for the industry to achieve export performance.
“It will be difficult to increase soybean exports to three million tons or more, since there is no specialized port infrastructure in Primorye,” said Alexander Sarapkin, Director General of Amuragrocentr LLC.
According to him, one has heard a lot of intentions to create specialized capacities in recent years, but no practical steps have been taken to build the terminals.
“If we talk about a large export of agricultural products, port infrastructure is primary here - it is not in the Far East,” agrees Aidemir Usakhov, vice president of the railway division of the FESCO transport group. “We tried to transship grain on the basis of the Vladivostok Commercial Sea Port (according to the direct version of wagon-ship - approx. Ed.), But this is nothing.”
As an alternative, grain transportation in containers is organized, however, this type of transportation is still not designed for a wide segment.
“This refers more to high-quality expensive grain, varieties that, relatively speaking, are needed in small volumes, not for baking bulk bread,” said Aydemir Usakhov.
The Ministry of Agriculture recognizes the problem of transporting Far Eastern grain and legumes, therefore, they see one of the main tasks in creating a logistics infrastructure in the region.
“For the Far East, it is more relevant than for the rest of the country,” says Sergey Levin. “We need to build distribution centers, loop railway shipments, and create a port for crop production.”
According to the deputy minister, this year the project on the construction of the Eastern Grain Gate transport corridor began. It provides for the organization of a grain transshipment terminal in the port of Zarubino. The initiator of this project - UMMC - is already implementing it at its own expense, the deputy head of the ministry said. At the same time, in order to receive state support, the Ministry of Agriculture sent proposals to the Ministry of Transport to include the future terminal in a comprehensive plan for the modernization and expansion of the main infrastructure of the Russian Federation until 2024.
However, Alexander Sarapkin is skeptical of the rapid implementation of this project. According to the businessman, the most convenient option for Amuragrocenter is the option of export shipments - directly from the Amur Region, where the Blagoveshchensk-Heihe cross-border road bridge is being built. In turn, the company in the area of the river port of Poyarkovo created a terminal for transportation along the Amur.
“This object was built for one year and for three years now we have been registering it as a checkpoint,” complains the head of the Amuragrocentr. “The construction of port infrastructure in Primorye, in our opinion, will take, given our experience, many years.”
When constructing the terminals, a number of factors must be taken into account; it is important to have deep-sea berths that will allow the loading of large-tonnage vessels. Otherwise, the freight component will make the output price of the products uncompetitive. The question also arises of loading specialized terminals and, as a result, the return on investment in them.
“If we rely solely on the production base of the Far East, today the UMMC’s initiative is enough to satisfy all export needs,” said Eduard Zernin, Deputy General Director of United Grain Company JSC (OZK).
According to him, in addition to the Far Eastern agricultural products, it is advisable to attract additional cargo base to Siberian ports - from Siberia. However, if you build up export potential at the expense of Siberian farmers, continues the deputy head of the OZK, then the main question arises - the development of main railway lines to coastal terminals.
As noted by Eduard Zernin, the program of the second stage of the modernization of the BAM and the Trans-Siberian Railway (Eastern Range of Russian Railways) until the 2024 of the year implies an increase in the annual carrying capacity of the public infrastructure to 220 million tons.
“Then, probably, a window will also appear for transporting grain, because at the moment the railway capacities are as clogged as possible with coal transportation. This is our main competitor today, ”explained the Deputy General Director of OZK. - The railway is not interested in interacting with the category of goods, the volume of which can be estimated at one to three million tons. That's when 120 million tons of coal are transported, this is a fundamentally different scale of business. ”
Hence, it is no coincidence that a high tariff for the delivery of agricultural products by rail to the Far East Railway port stations is a constraining factor for export growth, said Alexander Sarapkin.
“Today, Russian Railways tariff rates according to the 10-01 price list are not competitive,” Eduard Zernin emphasizes. - To make them competitive, subsidized tariffs are required. As far as I know, the Ministry of Agriculture is currently working on this topic and an initiative will be put forward in the near future to offset costs. ”
Russian Railways OJSC, in turn, said Fidel Vice-President Aydemir Usakhov, you need to know how much rail transportation the farmers guarantee, then preferences are possible within the framework of the tariff corridor.
A certain sale of agricultural and food products in China is possible through the electronic commerce market. True, brand recognition is necessary for raising domestic products, says Sergey Lebedev, Alibaba director for government relations with the Russian Federation. According to him, if in the north-east of China, bordering the Russian Federation, Russian goods are quite well-known, then in the south of the country it is much less. The situation could be corrected by state development institutions that have a mandate and budget for marketing research. Meanwhile, decisions are again required by an incompletely formed logistics infrastructure.
“The Chinese consumer is quite sophisticated, tempted to develop, first of all, the domestic e-commerce market. He’s not ready to wait for a product that will go to him for more than a week, ”the representative of Alibaba emphasized.
In this regard, he believes, the creation of bonded zones would help, not only in the Chinese provinces, but also in Russia. In the Far East, it is advisable to organize them within the framework of the existing territories of priority development.
“Bonded zones could become a driver for taking their TOP to a new level,” Sergey Lebedev is convinced.
By the way, one of such pilot projects may appear in the Amur Region. Earlier, the regional government expressed the idea of organizing a bonded zone near the currently under construction cross-border bridge crossing Blagoveshchensk - Heihe.